Why Does Not Motor Insurance Cover Consequential Damages?

Ever noticed how documents and advertisements related to insurance and other financial tools come with an asterisk mark? This asterisk holds extremely important information that should not be missed out. Generally, an asterisk is used to divert your attention to the footnote stating the exception, exclusion, or condition.

Even motor insurance comes with similar conditions. When you buy vehicle insurance, you are expected to thoroughly read inclusions and exclusions. If you do, you would find that vehicle insurance does not cover consequential damages. Mostly, people are either not aware of or are confused about this particular exclusion. This forms a gap in their motor insurance cover.

What is a Consequential Damage?

Most motor insurance providers do not cover consequential damages. Simply put, consequential damage is extended damage. It is caused by an indirect impact or arises out of prior damages which were duly addressed.

Consequential losses or damages are collateral costs. They are caused by indirect or derivativedamage to the vehicle or any of its tangible parts.By indirect means, the damage is the consequence of a damagingaction or an accident. It is like second-tier losses that are not compensated even if you have a comprehensive or own-damage vehicle insurance policy.

Example of Consequential Damage

Since this could be a little confusing, let us use an example for better understanding:

• For example, if your car gets into an accident and suffers engine oil leakage. Now, yourcomprehensive motor insurance policymay cover the costs of plugging the engine oil leakage. However, if your engine stalls after that, the cost of fixing it will not be covered by your car insurance.
• In another instance, let’s say, you end up driving through a water-logged area due to some unavoidable reasons. In doing so, water seeps into the engine and causes damage. Now, the loss or damage and the corresponding expenses will not be compensated by your vehicle insurance. This is because the loss has not occurred due to incessant rains or flooding. Instead, it is a consequence of cranking or taking the car into a water-logged area.
• Or, suppose your car gets towed out because you parked it in a no-parking zone. While towing, the bonnet of your car gets scratched or damaged. Now, thiswill not be covered by your car insurer because the damage did not occur due to an accident. Rather, it was the consequence of parking in a no-parking zone.

What Happens to Insurance Claims in Case of Consequential Damage?

It does not matter if the action was deliberate, non-deliberate, unavoidable, or unprecedented. The resulting loss of consequential damage is not covered under general vehicle insurance because these indirect risks are not covered under the policy.

Remember, anything that is not specifically and unambiguously mentioned in the policy outline can be refused coverage. Insurance functions on the premise of identified risks and not on an open-ended range of uncertainties.

It is of utmost importance to read the fine print before raising a settlement claim. When you buy vehicle insurance, you must read and comprehend the features, particulars, and conditions of the insurance document word by word.

It is always better to speak to your relationship manager or contact customer service before raising a claim.

The Way Out to Consequential Loss

Avoid actions that can cause damage to your car in ways you cannot claim settlement. For example, if for any reason you have to drive the car into water-logged streets, don’t try to crank it or force start the engine. Rather call your insurer and get it towed to the nearest network garage. Also, do not park in a no-parking zone.

You can never exhaustively predict what can go wrong with your vehicle. So, thoroughly reading the policy document and being cautious would go a long way.